Lazear v. National Union Bank

• Decision Date: 19 June 1879
• Parties: JESSE LAZEAR v. THE NATIONAL UNION BANK OF MARYLAND, at Baltimore.
• Court: Maryland Court of Appeals

52 Md. 78

JESSE LAZEAR v. THE NATIONAL UNION BANK OF MARYLAND, at Baltimore.

Court of Appeals of Maryland.

June 19, 1879.

Appeal from the Superior Court of Baltimore City.

Lazear Brothers, who had been for some years engaged in the wholesale grocery business, keeping their commercial account in the Western National Bank of Baltimore, in 1868, at the invitation of Mr. William W. Spence, a director in the National Union Bank of Maryland, transferred their account to the latter bank. Becoming its depositors or customers, they frequently offered for discount to the appellee country paper, mostly of their Western country customers, which was unknown to the bank; they also offered notes, to a limited extent, drawn by their father, the appellant, to their order and by them endorsed.

This action was instituted by the appellee to recover of the appellant on the following guaranty:

"For value received, I hereby guarantee to the National Union Bank of Maryland, at Baltimore, all liabilities to said bank of Lazear Bros., now existing, or which may hereafter arise, to the extent of twenty-five thousand dollars, I hereby holding myself liable to said bank to that extent, for all paper that may be held by the bank of Lazear Bros., either as drawers or endorsers, in the same manner as if endorsed by me, I hereby waiving notice of protest of such paper."

[Signed.] "Jesse Lazear."

At the trial of the cause, the appellee offered in evidence the foregoing guaranty, which was conceded to have been executed on the 3rd of February, 1870, and proved the genuineness of the appellant's signature thereto. The appellee also offered in evidence seven promissory notes, of which it was the holder, all drawn by Lazear Brothers, to their own order and endorsed by themselves, six of which were also endorsed by W. D. Schurtz & Co., who were also customers of the appellee, and for whom the said six notes were discounted the proceeds being carried through the books of the appellee to the credit and for the benefit of said W. D. Schurtz & Co., by whom these notes were offered for discount. The remaining note, dated the 22nd of June, 1872, at ninety-five days, for $5000, was purchased by the appellee from James Winchester & Son, brokers. The notes were all put in evidence, subject to exception. It was proved by Mr. Taylor president of the appellee, that these notes were acquired by the appellee on the faith of and looking to the guaranty given by the appellant; and that payments had been received on account of the six notes by collection of a note of August Douglass, obtained as a collateral from Schurtz & Co., and by dividends from the trustee of Schurtz & Co., and that payments had been made on all the notes by dividends received from the assignees in bankruptcy of Lazear Brothers. This action was brought to recover the balance due on these notes. It was in evidence that the six notes referred to, were discounted at the rate of seven and one-half per centum per annum, by agreement between the parties and the appellee, and the remaining note was bought at the rate of nine per cent per annum.

First Exception.--The appellant, during the cross-examination of Mr. W. W. Taylor, president of the appellee, proposed to him this question: "Tell the jury what was the occasion of this paper (referring to the guaranty offered in evidence) being suggested," but the question was objected to by the appellee, thereupon the appellant, in order to explain his purpose in asking such question, and the proof intended to be elicited thereby, offered the following statement:

"The defendant, for the purpose of showing that the indebtedness of Lazear Brothers to the bank, as its customers, and for paper drawn or endorsed by them and discounted by the bank for their account, and not the general indebtedness of Lazear Brothers to the bank for any paper of theirs which it might buy from outside parties, or discount for others of its customers, was the subject of the guaranty given in evidence. And for the further purpose of enabling the court to apply the said guaranty to its proper subject by reference to the surrounding facts and circumstances. And for the further purpose of proving the real consideration of the said guaranty between the parties thereto. And also for the purpose of enabling the court to determine whether or not the said guaranty was a continuing guaranty. And for the purpose of showing a latent ambiguity in said guaranty as the subject-matter to which it was applicable and of removing said ambiguity, offered to prove:"

"[That the firm of Lazear Brothers were customers of the plaintiff at the date of the guaranty, and had so been for two years or thereabouts prior thereto; that they had been prior to and were at that date in the habit of asking and receiving discounts from the plaintiff on paper of their (Lazear Brothers') customers, endorsed by themselves, and sometimes by their father, the defendant in this case; that it was often inconvenient to procure the endorsement of defendant, as he was a resident of the county]. And that the said guaranty was requested of the said Lazear Brothers by the plaintiff, and given accordingly by the defendant to the plaintiff, as a substitute for such endorsements in the future, and to prevent the delay and inconvenience of obtaining them, and for the purpose of giving credit to Lazear Brothers in their direct dealings with the plaintiff as its customers, and in respect to paper discounted, or to be discounted by it for their direct benefit and account, and on their application, and not otherwise. And also to show that there was an express agreement and understanding at the time of the delivery of said guaranty that it was only to apply to paper discounted for the use of Lazear Brothers."

But the appellee objected to the admissibility of the proof so offered, and to every part of it except to the introductory part thereof contained within brackets, and the court (Dobbin, J.,) excluded all of the said proof, except the part aforesaid, from the jury; to which ruling of the court, and the exclusion of the proof from the jury, the appellant excepted.

Second Exception.--The appellant, after the plaintiff had closed its case in chief, presented to the court a statement setting forth the proof intended and offered to be given by William W. Spence, and by the defendant, and by other witnesses in his behalf, as follows:

["The defendant offers to prove by William W. Spence, a director of the plaintiff, prior to and at the time of the execution of the guaranty sued upon, and by the defendant, and other witnesses, that the firm of Lazear Brothers were invited by the said Spence to transfer their account from the Western Bank to the National Union Bank, (the plaintiff,) and did so at his invitation; that they were in the habit of offering for discount by said plaintiff a good deal of country paper of such as the bank by its rules of discounting required, two dollars for one, unless there was a city endorser, besides the customer offering the same;] that at a meeting of the board, in which the matter was discussed, the said Spence suggested that, in order to protect the bank, in discounting such paper for Lazear Brothers, and to supersede the necessity of exacting two for one, or an additional city endorser, the bank should request Lazear Brothers to give it a guaranty from their father, the defendant, of the same sort as the one he had given the Western Bank, to the knowledge of the said Spence, and whereby he should indemnify the bank to a certain amount for such discounts as the bank might make for Lazear Brothers; that the board approved of the suggestion, and authorized Mr. Spence to communicate it to Lazear Brothers, which he did, and they agreed accordingly to procure such a guaranty on such purpose from their father, to the amount of $25,000; that Mr. Spence reported to the board his conversation with the Messrs. Lazear and its result, and their promise to procure such a guaranty, which the board approved and accepted, and requested Mr. Spence to see the Messrs. Lazear Brothers and ask them to see Mr. Mickle, the cashier of the plaintiff, who would prepare such a paper which Mr. Spence accordingly did; that James Lazear, one of the firm, accordingly saw Mr. Mickle, who gave him the guaranty here offered in evidence, which he took to the defendant, who asked whether it was to the same effect as the guaranty above mentioned, given to the Western Bank, i e., to guarantee payment of paper discounted by the bank for Lazear Brothers, to which said James Lazear, in good faith and so believing, answered in the affirmative, whereupon the said defendant, in like good faith and so believing, signed the said guaranty, without reading the same; that said James Lazear took the said guaranty to Mr. Mickle, and delivered it to him, saying to him, that it was of course understood between them, that said paper guaranteed nothing but the paper signed by, or endorsed by Lazear Brothers, and discounted by the bank for them, to which Mr. Mickle replied, "That's all;" and said Lazear delivered the guaranty to him accordingly with that common understanding between them, so expressed and recognized by both, and not otherwise."

"This evidence is offered to show, not merely the subject of the said guaranty, and apply the language of the guaranty to such subject, and for the other purposes named in the defendant's offer of evidence, heretofore made and rejected, but also to show that the guaranty as offered and construed by the plaintiff, was not the contract or guaranty of the defendant, and that the use attempted to be made of it, by the plaintiff in this action, and for the purposes of recovering therein upon or to the extent of the notes offered...